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Bharat Petroleum Corporation Vs. Collector of Customs - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Mumbai
Decided On
Reported in(1983)LC1813DTri(Mum.)bai
AppellantBharat Petroleum Corporation
RespondentCollector of Customs
Excerpt:
.....part of the corporation. besides, there is a valid argument by the appellents that in identical cases remission of central excise duty is given and the same benefit should be extended to the goods warehoused under the customs act. unlike on the excise side, under section 23 of the customs act, it is mandatory for the asstt. collector to remit the duty on the losses provided he is satisfied that the losses are genuine. in the present cases, there are no allegations that the losses are not genuine. the warehoused goods remained under the customs control. therefore, there is no doubt that the losses qualify for remission of duty under section 23. considering these facts, we are of the opinion that remission is permissible on the losses in terms of section 23 of the customs act......
Judgment:
1. M/s. Bharat Petroleum Corporation Ltd. filed a petition dated 23.7.1980 to the Government under old Section 131 of the Customs Act and this has been transferred to us and treated as an appeal under Section 131-B ibid. The appeal of M/s. Bharat Petroleum Corporation Ltd. covers six orders of the Assistant Collector of Customs as mentioned in the appeal memo which were confirmed by the Appellate Collector of Customs in his order dated 14.1.1980. A prayer has been made by the Corporation in the written memo that they have paid only one set of fee as six orders of the Assistant Collector were disposed off by a single order of the Appellate Collector. However, they are prepared to pay extra fees as may be ordered. Taking up this plea in the appeal first, we find that we have already held that in the aforesaid circumstances, only one appeal to the Tribunal should suffice and therefore there is no need for payment of the extra fees as offered by the Corporation. We refer in this behalf to our Order in appeal No.C.D.(T)(Bom.) No. 30/82 dated 28.2.1983 in the case of Unique Pharmaceutical Laboratory v. Collector of Customs, Bombay, E.L.T.April, 1983 page 628. Having settled this point, we deal with the merits of the appeal. Shri Dafle for the appellants has argued that all these six cases covered in the appeal of the Corporation\represent losses on account of transfer of the concerned type of the petroleum product from one Bonded warehouse to another at the same warehousing station in 5 cases and from one warehousing station to another warehousing station in the 6th case. In all these cases Shri Dafle has submitted that the losses noticed on transfer are due to natural causes and Section 70 of the Customs Act and Notification No. 122/63, dated 11.5.1963 issued thereunder provide for remission of the duty on these products. The duty on these losses should therefore be remitted. He has, further, argued that the transfers had to be made for operational reasons and that the losses are very often unnatural and apparent. He has also argued that under Section 23(1) of the Customs Act, the Assistant Collector has the power to remit the duty on the losses noticed in the warehoused goods. A further plea has been put forward that in the case of non-duty paid petroleum products manufactured indigenously, the Central Excise authorities permit remission of Central Excise duty. On this basis in similar circumstances, the remission of customs duty on the losses should also be given. In one out of the six cases, the repeated transfer of the particular parcel of the petroleum product resulted in gain of almost the same quantity as the loss noticed on final transfer of the same product. This instance has been cited to buttress the appellants contention that the losses are due to natural causes. Shri Dafle has, therefore, prayed that the Corporation's appeal should be allowed.

2. Shri Krishan Kumar for the department has opposed the submissions.

He has argued that the transfers of the petroleum products were permitted by the Assistant Collector of Customs on the applications of the appellants. The appellants had given a written undertaking to pay duty on the losses noticed on transfer. Accordingly, the Asstt.

Collector, had correctly collected the amounts of duty on the losses.

Therefore, there was no case for remission of the duty and accordingly the Corporation's appeal should be dismissed. Shri Krishan Kumar submitted specimens of the form and the application made by the appellants for seeking the permission for transfer of the petroleum products.

3. We have examined the submissions on both the sides. Taking first the argument of the appellants that the losses are covered by Section 70 and Notification No. 122/63, dated 11.5.63 issued thereunder, it is seen that Section 70 deals with remission of duty noticed at the time of delivery of the goods from a warehouse. In all the six cases, the deficiencies in the quantities warehoused were noticed on transfer of the products from one Bonded warehouse to another in 5 cases and from one warehousing station to another warehousing station in the 6th case.

Section 70 appears to govern only losses in storage on account of the volatility of the warehoused goods. The losses due to transfer would not be covered under Section 70. It is not the case of the appellants that the six parcels of the petroleum products under appeal were found deficient due to storage. Hence, we are of the opinion that Section 70 does not apply to the cases in appeal. From this point of view the plea taken up by the appellants for remission of duty in terms of Section 70 and the Notification No. 122/63, dated 11.5.63 is not sustainable. As regards the appellant's claim that the remission is admissible in terms of Section 23 of the Customs Act, we find that this claim is valid. The goods in question have remained in the warehouse before the losses were noticed and this was before the removal of the goods for home consumption. Under Section 23, the Asstt. Collector of Customs has to be satisfied that the goods had been lost before their clearance for home consumption and in that case he has to give necessary remission of duty on the lost goods. There is no dispute or denial that the losses dealt with in the appeal were due to any other reasons except natural causes, as observed earlier. These losses are due to errors in gauging spillages, evaporations, etc. All these are natural factors and they would come within the purview of Sec 23. Had it not been so, the Customs House would have taken action for contravention of Sections 71 and 72 of the Customs Act and resort to confiscation of the goods under Section 111(3) of the Customs Act and levy of penalty under Section 112 ibid. This has not been done in the cases under appeal and therefore it indicates that there has not been any misdemeanour on the part of the appellants. The Asstt. Collector gave the permission for the transfer of the petroleum products in terms of Section 67 of the Customs Act and after taking a bond from the Corporation that duty on the losses would be paid by them. But this undertaking for payment of duty should not mean that duty has necessarily to be collected in all cases of shortages. The shortages are natural and not due to any negligence on the part of the Corporation. Besides, there is a valid argument by the appellents that in identical cases remission of Central Excise duty is given and the same benefit should be extended to the goods warehoused under the Customs Act. Unlike on the excise side, under Section 23 of the Customs Act, it is mandatory for the Asstt. Collector to remit the duty on the losses provided he is satisfied that the losses are genuine. In the present cases, there are no allegations that the losses are not genuine. The warehoused goods remained under the Customs control. Therefore, there is no doubt that the losses qualify for remission of duty under Section 23. Considering these facts, we are of the opinion that remission is permissible on the losses in terms of Section 23 of the Customs Act. Accordingly, we set aside the orders of the lower authorities and allow remission of duty in terms of Section 23 of the Customs Act. The amounts of duty paid by the appellants are directed to be refunded to appellants. The appeal is thus allowed.


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